House rejects tax-cut plan, making hike more likely Jan. 1

The bitter showdown of Republicans versus the White House and congressional Democrats over a Social Security tax break grew uglier and more tense Tuesday, and the result is that 160 million people face the increasingly likely prospect of a tax increase Jan. 1.

President Obama told House Republicans "The clock is ticking."
AP Photo/Carolyn Kaster

President Obama warned House Republicans "the clock is ticking."
AP Photo/Carolyn Kaster

WASHINGTON — The bitter showdown of Republicans versus the White House and congressional Democrats over a Social Security tax break grew uglier and more tense Tuesday, and the result is that 160 million people face the increasingly likely prospect of a tax increase Jan. 1.

The GOP-led House of Representatives, by a 229-193 vote, formally disagreed Tuesday with a bipartisan Senate plan to extend the current tax rate for two months. Employees have paid a 4.2 percent tax this year; it's scheduled to go up to 6.2 percent next year unless the current rate is extended. The House vote makes an increase likely.

House Republicans want a yearlong tax break, and they say terms for one can be negotiated over the next two weeks if the Democratic-led Senate will try. Most congressional Democrats are willing to go along with the Senate approach and negotiate toward the yearlong break after the holidays and before the two-month deadline. The Senate adjourned last week until mid-January.

In no small part, the standoff is about partisan positioning for next November’s elections. Each party thinks it can persuade voters that the other is being irresponsible.

After the House vote, an angry President Barack Obama warned, "The issue right now is this: The clock is ticking; time is running out." And, he said, the Senate bill is "the only viable way to prevent a tax hike January 1. It's the only one."

He urged House Speaker John Boehner of Ohio and other House Republicans to "put politics aside, put aside issues where there are fundamental disagreements and come together on something we agree on. And let’s not play brinksmanship. The American people are weary of it; they’re tired of it."

Boehner was defiant: "We've done our work for the American people," he told a news conference. "Now it's up to the president and Democrats in the Senate to do their job as well."

Told that Obama was seeking his help, Boehner said, "I need the president to help out, all right?"

Other changes also are in store Jan. 1 if the two sides can't agree: Medicare payments to physicians would drop 27.4 percent, and long-term jobless workers would be unable to collect up to 99 weeks of benefits.

The next step in the legislative process usually involves House and Senate leaders naming negotiators, or conferees, to work out differences and craft compromise legislation that would need each chamber's approval.

But it's unclear when or even whether such a negotiation will occur.

The Senate adjourned thinking that the House would go along with its compromise, and Majority Leader Harry Reid, D-Nev., has balked at appointing negotiators.

"I have been trying to negotiate a yearlong extension with Republicans for weeks, and I am happy to continue doing so as soon as the House of Representatives passes the bipartisan compromise to protect middle-class families, but not before then," he said Tuesday.

Boehner named House conferees. Even if the two sides meet, they face tight deadlines. Rep. Steven LaTourette, R-Ohio, figured that negotiators have two weeks to get a deal. Since Jan. 1 and 2 are federal holidays, lawmakers would have until midnight Jan. 2 to work something out, he said.

Typically, during partisan battles such as the one waged Tuesday, warring lawmakers send signals as to where and how they're willing to compromise. None of those signals was evident this time.

House members took turns sniping at one another Tuesday and making dire warnings about pending economic chaos — and political disaster for the other side.

"They never wanted the tax cut from the beginning," House Minority Leader Nancy Pelosi, D-Calif., said of Republicans. "Every difference of opinion is not a difference of principle. Maybe here it is. Maybe the principle at stake here is the anti-government, ideological warfare that the tea party Republicans, in the extreme, have taken us to."

“I think today was designed to demonstrate dysfunctionality," added Congressional Black Caucus Chairman Rep. Emanuel Cleaver, D-Mo. "Frankly, I think the other side is doing a dynamic job in telling the nation that this is a worthless body."

"Two months?" he mockingly asked. "One of the pillars of the president's jobs bill was an extension of the payroll tax for a year." Obama proposed a one-year extension in his September jobs package.

He did, said Rep. Bill Pascrell, D-N.J., but "he wasn't asking us to vote on your plan," he said. The president proposed in September cutting the Social Security tax to 3.1 percent for employers and employees.

Democrats wanted to pay for it with a surtax on millionaires; Republicans wanted to pay for the breaks with a variety of sources, including a federal pay freeze. Neither party would accept the other’s prescription for payment.

The sniping extended even to criticism of the Senate.

“We hope what doesn’t happen is the Senate goes shopping," said Rep. Tim Scott, R-S.C. "What we hope happens is the Senate takes seriously the opportunity to send some conferees in here so that we can make sure we have a 12-month extension of the payroll tax.”

On Saturday, 39 Senate Republicans voted for the two-month extension. So far, five GOP senators — most of whom face re-election next year — have criticized their House colleagues for their stand.

"What is playing out in Washington, D.C., this week is about political leverage, not about what’s good for the American people," said Sen. Dean Heller, R-Nev.